MNI DATA ANALYSIS:Canada Wholesale Sls +0.1%, Ex Autos +0.5%>

By Yali N'Diaye

     OTTAWA (MNI) - Canadian wholesale sales edged up 0.1% to C$63.3 

billion in January, in line with market expectations, data from 

Statistics Canada showed Tuesday. 

     The 12-month growth rate slowed to 6.4% from 8.1%, the slowest pace 

since January 2017. 

     However, underlying data indicated that activity was stronger than 

the headline figure suggested, starting with upward revisions to 

December's estimates, and gains across 66% of wholesale trade, including 

machinery. 

     Besides, a 2.7% appreciation of the Canadian dollar against the 

greenback on average over the month weighed on the value of wholesale 

sales, contributing to a negative price effect. 

     --STRONGER UNDERLYING DATA 

     Instead, real activity strengthened in January, with sales volumes 

up 0.5%, erasing December's decline. 

     December's sales estimates were revised up, by 0.3 percentage 

points to -0.2% for nominal sales and by 0.4 percentage points to -0.5% 

for volumes. 

     In addition, sales increased in four of seven subsectors, led by a 

3.1% gain in food, beverage and tobacco, and more importantly by a 1.6% 

increase in machinery, equipment and supplies on the back of a 3.3% gain 

in December, sending a positive signal for investment activity. 

     Regionally, the picture was mixed, with sales up in half of the 

provinces. 

     --AUTOS, BUILDINGS WEIGH 

     On the other hand, the auto and parts sector continued to weigh on 

the overall performance in January, as sales contracted 1.6% after 

falling 1.0% in December. Autos sales alone fell 2.4%. 

     Overall sales excluding motor vehicles and parts rose 0.5%, after 

edging down 0.1% in December (revised from -0.4%). 

     Building material and supplies were the other large negative 

contributor, with sales down 4.0%, the largest drop since August 2017. 

     --HIGHER INVENTORIES 

     Inventories increased for the second consecutive month, recording a 

gain of 1.1% after rising 1.5% in December, a negative signal for 

production activity ahead. 

     The inventory-to-sales ratio rose to 1.32 in January from 1.31 the 

previous month. The last time the ratio was this high was in November 

2016, and the last time it was higher than 1.32 was in March 2016 

(1.34). 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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